Canadian economic crisis (2022–present)
The situation deteriorated further after a 2014-15 shock in oil prices, with Canadian per-capita real GDP growing at just 0.4% annually, compared to the 1.4% average of surveyed advanced economies.
[7] In 2024, Canada experienced what the Fraser Institute characterized as the country's most severe decline in living standards in four decades, manifested across multiple economic sectors and metrics.
Plans to stabilize the Canadian economy were further complicated by aging demographics, significant technological disruptions including artificial intelligence, and increasing populism exacerbated by economic troubles.
[8][9] In 2023, government spending increased in response to inflation pressures, particularly due to Western sanctions against Russia as a result of its invasion of Ukraine beginning in 2022 and supply chain disruptions caused by the conflict.
Federal debt nearly doubled from 2014–15 to 2024–25, approaching $2.1 trillion, with forecasts suggesting an additional $400.1 billion increase by March 2029 due to projected deficits in future plans.
[22] These issues were exacerbated by poor cooperation between federal, provincial, and local policies and regulations due to a lack of intergovernmental coordination, causing significant delays in housing projects.
This demographic surge prevented the consecutive GDP declines typically defining a recession, despite significant economic challenges following the 2022-2023 period of inflation and interest rate increases by the Bank of Canada.
Household spending per person after inflation dropped 2.6% from its post-pandemic peak and remained 2% below pre-pandemic 2019 levels, indicating diminished purchasing power due to elevated prices and interest rates.
The Wilson Center claimed that Canada's productivity challenges were exacerbated by various structural factors which included geographic and climate-related challenges due to the country's vast size and harsh climate conditions affecting transportation and infrastructure, widespread provincial regulations creating interprovincial trade barriers, market concentration in key sectors like banking, telecommunications, and energy being dominated by only a few firms, and Canada's predominance of small businesses in its economy (98% of which had fewer than 100 employees).
[29] Since Justin Trudeau's leadership started, private sector investment declined by approximately one-third, while government spending expanded to represent nearly half of GDP.
This shift was regarded as especially notable relative to Canada's economic position during the 2007-2008 global financial crisis, when the country demonstrated greater resilience than many other developed nations.
[30] While Canada initially demonstrated strong performance during its COVID-19 recovery, partly due to substantial government stimulus approaching CAD$500 billion, the country's economic trajectory changed notably after 2022.
This decline coincided with shifting American consumer patterns, as U.S. spending moved away from goods, a traditional strength of Canadian exports, toward services primarily provided by U.S.-based businesses.
[28] In November 2024, United States President-elect Donald Trump announced plans to implement 25% tariffs on Canadian and Mexican imports effective January 20, 2025.
[31] The threatened tariffs were predicted to affect the $773 billion bilateral trade relationship between the United States and Canada, with potential consequences across multiple sectors between both nations.
The integrated North American automotive sector, which conducted over $110 billion in bilateral trade during 2023, also faced potential disruption due to it depending on vehicle components regularly crossing the border multiple times during production.
Despite strong headline growth figures, the country's standard of living performance notably lagged behind the United States and other advanced economies, with this trend accelerating after an oil price shock in 2014-15 and continuing through the post-pandemic period.
Primary care funding in Canada represented 5.3% of the total health budget, significantly lower than the 8.1% average between "Denmark, Finland, France, Germany, Italy, the Netherlands, New Zealand, Norway, and the United Kingdom".
[33] The study noted that Canadian patients, unlike those in countries such as Norway and Finland, where citizens were automatically registered with doctors or health centres, suffered extended waits on provincial family practitioner waitlists, increasing the use of private, out-of-pocket services.
[34] Young Canadians aged 18–44 were particularly impacted, with housing costs affecting major life decisions including family planning and geographic mobility.
Public opinion surveys revealed widespread dissatisfaction, with an Ipsos poll indicating that 70% of the general population and 80% of those aged 18–34 agreed with the statement that "Canada is broken."
[39] As a result of food inflation rates reaching 8.5% in September 2024, Prime Minister Justin Trudeau's government convened a summit with executives from Costco, Empire, Metro, Loblaw, and Walmart Canada.
The summit was organized to demand that grocery chains develop a plan to decelerate rising food inflation before Thanksgiving or face potential tax measures, with MPs such as New Democratic Party leader Jagmeet Singh calling for government action against "corporate greed".
[39] The Trudeau government announced substantial reductions to immigration targets in 2024, including a nearly 20% decrease in permanent residency grants and significant restrictions on visa workers and international students.
